After learning in February that a dreaded mid-year tuition hike was not going to be implemented, students received another dose of good financial news from the University late last week. University President Mary Sue Coleman revealed the details of a new need-based grant program called M-PACT. This program will replace student loans with grants (which, unlike loans, do not need to be repaid upon graduation) for approximately 2,900 undergraduate students qualifying for need-based aid. University administrators deserve credit for this generous and well-designed program, especially for managing to implement it during a time of budget cuts, and they should push hard for donations that would make the program a permanent source of need-based financial aid.
M-PACT will provide grants of $500, $1,000 and $1,500 to eligible students. The money can be used to replace loans in a student’s financial aid package. It is important to realize, however, that the actual savings for a student who qualifies for M-PACT will exceed the amount of the grant, because that same amount in the form of a student loan would be subject to interest. Even though many student loans are taken out at low interest rates, interest payments still cost thousands of dollars over the lifetime of a loan.
The program is primarily designed to assist students from low-income backgrounds and will help increase the accessibility of the University for these students. Once implemented, the program is expected to decrease the amount of student loans in an average financial aid package from 30 percent to 20 percent for students whose families cannot afford to contribute toward tuition costs. Although the program is initially expected to assist 2,900 students, the University hopes that M-PACT will expand as more low-income high school students become aware of the program and decide to apply to the University.
In addition to helping draw more low-income applicants and students to the University, M-PACT will aid the nearly 1,700 current students who are facing cuts in their federal Pell Grants as the result of a new eligibility formula. Coleman has also indicated that she would like to see the program grow to offer assistance to students who inhabit middle-class income brackets (and therefore do not qualify for federal grants) and yet still have difficulty covering all of the costs associated with higher education.
M-PACT is clearly in a position to offer significant financial assistance to a large number of students, but at present, only three years of guaranteed funding (drawn from the Michigan Difference campaign) exist to support the program. Coleman has stated that she hopes to maintain funding for M-PACT by establishing a $60 million endowment with the help of private donations. The merits of M-PACT warrant a strong push over the next three years to make this program — and the accessibility that it fosters — a permanent feature of the University.